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HELPING CLIENTS

Win With Digital

2017 ANNUAL REPORT

At Cognizant, we are hard at work envisioning and building the digital economy. We do so to support our clients, many of which serve as the pillars of the global economy. With Cognizant as their partner, they’re combining their assets and knowledge with powerful digital technologies to generate new revenue streams, new operating models, and entirely new ways of delighting their customers. As a result, these clients are emerging as a new generation of digital heavyweights. And we’re investing aggressively to continuously build new capabilities to help them Win With Digital.

Operating Income In Millions

$5.1B*

Cash & Short-Term Investments

$2.1B*

Capital Returns Though Dividends & Share Repurchases

357

Strategic Clients**

Up from 214 in 2012.

* As of December 31, 2017** Clients with the potential to generate at least $5 million to $50 million or more in annual revenue.

Full year revenue was $14.8 billion – up nearly 10% year over year. GAAP diluted EPS was $2.53. Non-GAAP diluted EPS was $3.77, compared to $3.39 in 2016. Our performance reflected growth across each of our segments and most of our geographies, as well as a nearly 30% rise in digital-related revenue.

From Our

CHIEF EXECUTIVE OFFICER

“We are hard at work helping clients envision – and succeed – in the digital economy. With Cognizant as their partner, our clients are combining their existing business assets with powerful digital technologies to generate new revenue streams and personalized customer experiences.”

Innovation that Satisfies Fast-Food Cravings

SoftBank Robotics Europe:

Human Innovation Makes Better Robots

The English Football Association:

Teaming To Advance Digital Engagement

Dexia:

Creating a More Agile and Efficient Platform

Swiss Re Group:

Partnering With a Global Risk Transfer Leader

Express Scripts:

Digital transformation makes prescriptions safer and more affordable

EmblemHealth:

Faster Better Claims Processing

AMPLIFYING BUSINESS STRENGTHS

Businesses today are racing to embrace the digital world. We have created a portfolio of industry-specific and cross-industry offerings focused on high-value business activities that blend modern digital platforms and frameworks with expert business and technology consulting and integration services. Below are several examples of ready-made elements that can be quickly deployed to maximize operational performance, improve time-to-impact, and minimize execution risk.

CSL Behring

Focused on Getting Better...Together

CSL Behring is a global bio-therapeutics leader, driven by a commitment to saving and improving the lives of people with rare and serious diseases. The company develops and delivers innovative plasma-derived and recombinant therapies for treating diseases such as coagulation disorders, primary immune deficiencies, hereditary angioedema, inherited respiratory disease, and neurological disorders. Headquartered in Melbourne, Australia, CSL Behring employs more than 17,000 people, delivering its therapies in more than 60 countries.

To advance its mission of care – and enable an efficient, sustainable, and scalable business model – CSL Behring is creating standardized and simplified global business practices, particularly for core processes in the areas of financial management and supply chain. The resulting program, known as PACE (Performance Achieved through CSL ERP), is designed to fulfill the company’s promise for delivering better patient outcomes, while supporting its 2020 revenue targets.

CSL Behring turned to Cognizant for help in implementing PACE. In addition to our deep expertise in the life sciences industry, a major asset was our familiarity with S/4 HANA, SAP’s latest enterprise application systems platform, which features an in-memory database that speeds processing and delivers real-time predictive analytics. At the time of the project launch, PACE was the largest S/4 HANA implementation for the life sciences industry in the Americas.

To speed this transformational digital initiative, we drew upon our Cognizant LifeCare solution, a ready-to-run, pre-configured S/4 HANA accelerator, built around leading practices in the life sciences industry. CSL Behring plans to deploy PACE globally over a 40-month period, in waves covering Europe, the Americas, and Asia Pacific. Eventually, the program will combine data analysis with process improvements in such functions as order-to-cash, source-to-pay, plan-to-inventory, and account-to-report. The first phase of the PACE program successfully went live in January 2018, providing a solid foundation for the remainder of the initiative.

Jack In The Box:

Innovation that Satisfies Fast-Food Cravings

Jack in the Box is one of the nation’s leading fast-food chains, with more than 2,200 restaurants in the U.S. It pioneered the concept of the drive-thru, and has always emphasized on-the-go convenience and quality. To keep pace with the needs and wants of its customers, Jack in the Box has committed to developing its digital, omnichannel capabilities.

Jack in the Box engaged Cognizant to design and implement a mobile food-ordering app and, more broadly, a strategy for innovation and growth in the digital space. The company selected us for our strength in mobile solutions, and our ability to deliver a digital strategy that would serve both its immediate and long-term needs.

Working closely with Jack in the Box’s IT, innovation, and marketing groups, we built foundational technology for a mobile app that operates within the company’s current IT environment and anticipates future requirements. We conducted an innovation workshop to generate design ideas, and then used an Agile process to build and test the app, ensuring it would meet the needs of all the company’s customers while building on the Jack in the Box brand personality. The app has a brand-driven theme: “Make busy lives better.”

Within months, the company rolled out the app in 125 stores in Southern California and Texas for a market test. Given the overwhelmingly positive feedback, Jack in the Box plans to extend the capability to locations nationwide in the first half of 2018. Moreover, we worked with Jack in the Box on a platform for deploying digital business practices that are focused on enhancing customer loyalty and driving revenue and growth over the long term.

SoftBank Robotics Europe:

Human Innovation Makes Better Robots

SoftBank Robotics Europe is a leader in humanoid robotics. By ensuring high-quality human-machine interactions, Softbank Robotics Europe aimed to scale production and meet rising global demand. Toward that end, the company asked Cognizant to provide quality engineering and assurance (QE&A) services for the artificial intelligence (AI) systems in its popular Pepper and NAO robots.

The solution required the expertise of a specialized team of Cognizant QE&A engineers dedicated to AI. The team is developing a standardized testing protocol for the NAOqi operating system – the robots’ “brains” – as well as for their default speech recognition, movement perception, and obstacle and collision avoidance applications to ensure optimal performance. Cognizant’s AI experts are also providing quality assurance testing for SoftBank Robotics Europe’s development toolkit, content management system, and partner applications.

These advanced testing and QE&A capabilities will enable SoftBank Robotics Europe to more quickly develop applications that allow Pepper and NAO robots to be even more intuitive, agile, and personalized. Today, these robots are used in retail shops and public places to welcome, inform, and entertain customers, as well as in educational settings, to help students learn in unique and fun ways. With further advances, the robots can eventually be deployed in other settings, including helping with assisted living tasks.

Cognizant’s capabilities in testing and assessing the quality of advanced AI software will help ensure that these humanoid robots can better “understand” human needs, behaviors, and expectations in a variety of situations. Ensuring quality will accelerate the introduction of new AI features, while helping SoftBank Robotics Europe reduce costs and scale its business globally – ultimately imbuing robotics with the sensibilities and skills to vastly improve our lives.

The English Football Association:

Teaming To Advance Digital Engagement

The English Football Association, or The FA, is the oldest and among the best-known organizations in world football. And while it attracts a global audience of more than 820 million to its annual Emirates FA Cup competition, the association realized it needed to foster closer, more regular, and more direct engagement with a wider segment of grassroots football participants. To relate to a fan and participant base increasingly glued to mobile devices, The FA made digital a key element of its game plan.

The FA has teamed with Cognizant to create a modern, world-class digital platform to support and promote participation “for all.” The association’s key goal is to engage directly with fans and participants, and also with current and potential supporters who organize football games at a grassroots level. We first worked with The FA to craft a strategy – a playbook for the association’s digital efforts. Together, we are creating a database that aggregates insights about FA followers and participants to deliver a personalized digital experience. We are then developing a range of digital engagement products specifically designed for fans, players, coaches, referees, and the parents of young athletes. For example, the “For Girls” platform encourages females to get involved in sport. We also helped The FA launch a digital product that enables local grassroots football clubs, teams, and leagues to track fixtures, matches, and results at league, team, club, and division levels.

As The FA extends its digital strategy, it is winning on and off the pitch by encouraging more fans to play and support grassroots football, thereby enhancing their passion for and enjoyment of the game.

Dexia:

Creating a More Agile and Efficient Platform

Dexia, a Belgian-French banking institution, faces the kinds of challenges that confront all financial companies in today’s fast-changing global marketplace: technological disruption, shifting regulatory mandates, and cybersecurity among others. To develop the flexibility to address these challenges, Dexia named Cognizant as its strategic provider of information technology and business process services for its capital markets and credit operations in France and Belgium in 2017.

Through this arrangement, Cognizant is helping Dexia to digitally transform its operations at enterprise scale, enabling the institution to benefit from advances in process automation, data analytics, and emerging technologies. Credit operations will migrate to a new, more nimble, and more cost-effective managed services platform. Additionally, Dexia’s fragmented legacy IT infrastructure will be modernized and optimized. Under the teaming arrangement, 150 of Dexia’s employees moved to Cognizant.

The arrangement is a “win-win” for both companies, improving the banking institution’s operational efficiency, agility, and cost structure, while adding skilled team members who are significantly augmenting our capabilities in the region.

Swiss Re Group:

Partnering With a Global Risk Transfer Leader

The Swiss Re Group is among the world’s leading providers of reinsurance, insurance, and other forms of insurance-based risk transfer, working to make the world more resilient. The Zurich-based company anticipates and manages risk – from natural catastrophes to climate change, from aging populations to cybercrime. Its aim is to enable society to thrive and progress, creating new opportunities and solutions for its clients.

Swiss Re has pursued a strategy of allocating capital to selected risk pools and revenue sources, broadening and diversifying its client base, and differentiating itself via client relationships and its role as a knowledge company. With this in mind, the company has focused on optimizing its resources and platforms, to ensure that it has the right talent, processes, and tools to serve client needs and excel in an ever-changing business environment. As a result, our 12-year partnership with Swiss Re has expanded to include multiple lines of services, including testing, application support, platform upgrade and implementation, and digital transformation.

To extend Swiss Re’s digital transformation journey, we have automated business processes across multiple lines of business, resulting in substantial increases in throughput, significant improvement in accuracy, and reduced operating costs. Our data scientists have created models using various algorithms to distill deeper insights for fine-tuning Swiss Re’s business strategy.

Today, we partner with all three Swiss Re business units – Reinsurance, Corporate Solutions, and Life Capital – with services delivered from 10 locations worldwide. The partnership has helped Swiss Re remain technologically adept, nimble, and cost-effective in enabling clients to manage risk in an increasingly complex world.

Express Scripts:

Digital transformation makes prescriptions safer and more affordable

Express Scripts Holding Company is a pharmacy services company putting medicine within reach. It provides network-pharmacy claims processing, home delivery pharmacy care, specialty pharmacy care, benefit design consultation, medical and drug data analysis, and many other services. With more than $100 billion in revenue in 2017, Express Scripts serves 83 million members and handles 1.4 billion prescriptions annually.

Cognizant has been Express Scripts’ strategic partner for more than 10 years, helping drive further automation, more transparency, and greater value in pharmacy benefits. Drawing upon our full end-to-end capabilities, Express Scripts has relied on us to execute multiple successful transformation initiatives across several of its business lines.

For its specialty pharmacy business, which serves patients with chronic, complex diseases that require specialized care, Express Scripts sought to compress the referral intake process, reduce cost to fill, improve patient and prescriber outreach, and enhance patient experience and health outcomes. The specialty Intake Transformation Solution helped Express Scripts streamline prescription orders from multiple intake channels, while providing a consolidated view of orders and enriched data. The system reduces the need for manually processing orders, resulting in considerable savings for Express Scripts. We are also building a common platform to enable seamless integration between complementary modules that will include a single-page dashboard, which provides a secure 360-degree view of the patient- or prescription-related information to the pharmacist.

We are also partnering with Express Scripts on a multi-year engagement to support all functions related to Medicare enrollment. Along with TMG Health, a Cognizant subsidiary and a leading provider of expert solutions for Medicare Advantage, Medicare Part D, and Managed Medicaid plans, we are working to upgrade the current systems environment to create a more efficient and integrated solution for Express Scripts’ Medicare Part D product offerings. Leveraging Cognizant’s TriZetto Facets core platform, enrollment administration manager, and financial reconciliation manager solutions, along with application management and business process services, we are offering rapid speed-to-value and the flexibility, scalability, and adaptability that Express Scripts needs to respond to market changes and regulatory requirements.

EmblemHealth:

Faster Better Claims Processing

EmblemHealth is among the nation’s largest not-for-profit health plans, serving 3.1 million people. In spite of its size, Emblem takes great pride in being a local, neighborhood health plan – even if that neighborhood consists of New York City area and the surrounding communities – and is committed to providing quality service to its clients and an extensive provider network.

The company was determined to address a growing backlog of “pend claims” that required manual review and were taxing Emblem’s capacity. Emblem turned to Cognizant for help in ensuring that the claims could be processed in a timely and responsive manner, in keeping with the company’s high standards of service.

We assembled an integrated Emblem Health/Cognizant team, led by Cognizant Consulting professionals with insurance industry, business consulting, and program management expertise to address multiple issues that had caused the pend claims backlog. The solutions included a thorough analysis of current and historical claims, resulting in changes to existing policies and procedures to prevent claims from piling up, and a program developed with the company’s IT department to speedily re-adjudicate backlogged claims.

The initiative was extremely successful, achieving a substantial reduction in claims inventory, a decrease in the days required for pend claims, and an increase in effective auto adjudication rates. This translated into a reduced need for employee overtime, and a greater ability to respond to provider needs.

Cognizant OnePlant™:

Making Manufacturing More Intelligent

The benefits of intelligent manufacturing have increasingly become evident to businesses in such diverse fields as automotive, electronics, chemical, pharmaceuticals, oil and gas, and food and beverages. In these and other sectors, clients increasingly expect manufacturing processes to anticipate and respond more quickly to customers’ needs, create customized products, enhance quality control, reduce downtime, gain better inventory visibility, and reduce energy consumption and operational costs.

Achieving these and other benefits through intelligent manufacturing takes a connected and complex ecosystem of machines and facilities, advanced data collection and analysis, and the automated movement and tracking of materials and products through the logistics chain. Cognizant OnePlant helps clients to quickly and systematically define their objectives, identify relevant KPIs, select the right technologies, design a process blueprint – and transition the intelligent manufacturing process from pilot to full rollout.

With Cognizant OnePlant, factories that had been "siloed" can now be connected via the industrial Internet of Things – and thus be integrated with supply chains and empowered by data to support more agile, collaborative, autonomous, and lean operations.

Payments Transformation:

Enabling Pay-as-You-Go

The banking and financial services industries are in the midst of a digital payments revolution, driven by new payment technologies, platforms, and providers. If they are not able to stay ahead of the rising demand by individuals and businesses for real-time, digital- enabled wallets, these institutions risk losing revenue. More importantly, they may drive customers out of the banking system entirely, to non-bank competitors that already offer digital payment services.

We saw an opportunity to help banking institutions embrace new payment technologies – and to do so expertly and efficiently, as well as at a reasonable cost. Drawing on our expertise in implementing end-to-end payment solutions for some of the world’s leading financial institutions, we created i.Pay, which uses easily configurable components to enable banks and other institutions to embrace new digital payment systems.

We are now working with several major banks, investment firms, and credit card issuers to implement solutions built around i.Pay.

Life Admin Core Platform:

A New Policy of Growth for Insurers

Life insurance and annuity (L&A) companies face an array of challenges, including shifts in demographics and customer demands, competition from non- traditional sources, and increasing regulation. To drive growth in a changing marketplace, companies must invest in new products, bring them to market quickly, and deliver a superior customer experience – all while reducing operational costs and inefficiencies.

The Cognizant LifeAdmin CoreTM platform enables L&A companies to simultaneously accelerate growth and operate more cost-efficiently. With LifeAdmin Core, legacy core applications that had been running on multiple platforms can be consolidated onto an end-to-end, cloud-based business-process-as- a-service (BPaaS) infrastructure, which simplifies and streamlines work, while converting fixed costs into variable expenses. In addition, the platform’s predictive analytics permit a 360-degree view of customers, while pre-built templates can accelerate new product launches, including for direct-to- consumer distribution.

Adaptive Spaces:

Elevating Customer Engagement for Retail, Travel, and Hospitality

Changing market dynamics are challenging retail, travel, and hospitality businesses to connect with customers in new ways, deliver highly personalized experiences, integrate physical locations with digital channels – and do it all more cost-effectively while driving growth. With our Adaptive Spaces solution, clients can use Internet of Things (IoT) sensors and AI to transform the way environments such as retail stores, hotels, and restaurants interact with and respond to customers’ needs.

Adaptive Spaces helps clients create facilities that better serve the needs of their guests, with more personalized, adaptive, and responsive experiences. In retailing, for example, a store can offer features such as AI-generated shopping recommendations, dynamic pricing based on the customer’s buying patterns, and touchless check-out, thus delivering a more engaging shopping experience. Smart hotels can store their guests’ room preferences, automate housekeeping or room service delivery, or provide an AI-enabled virtual concierge. And, restaurants can personalize menu selections to the diner’s taste and dietary needs.

We are already working with clients in the department store, specialty retail, apparel, hotel, and food service industries to make their spaces more interactive, engaging, and productive.